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Warning: Don't let the beginning of this diary fool you. It's actually about hegemony & the liberal vs. conservative view of "freedom".
Demos has a new report out, Flying Blind: Airline Deregulation Reconsidered, and what do you know? Surpise! Surprise! Deregulation doesn't work for the airline industry either!
While the report focuses attention on the current sorry state of the airline industry, and its underlying structural problems that lie behind the recent rash of airline crashes and near-misses such as the crash of the Continental/Colgan flight to Buffalo, it traces current conditions back to the decision, 30 years ago, to deregulate the airline industry.
How's this for an astonishing fact: Since 2000, U.S. airlines have reported net losses of more than $33 billion--almost twice their accumulated profits from 1938 to 1999!
Of course, the trump card for the deregulators is the claim of low fares, and broad affordability, but the executive summary notes:
[Economist Alfred] Kahn [the "father of airline deregulation"] and others have taken refuge in the argument that deregulation has produced lower airfares and wider access to air travel. The Demos report concludes that even this benefit is widely overstated. "While the price of flying has come down over the past thirty years," the report notes, "it decreased at a comparable rate from the 1940s through the 1960s. In any event, low airfares are as much a problem as an achievement if they leave an industry without the resources to maintain service standards and make crucial investments in equipment, technology, and human capital."
If anything this understates the case. If deregulation has resulted in net industry losses, those fare reductions were paid for by the airlines creditors! What kind of a business model is that? Considering the amount of technological innovation, and the increased traffic volume, it seems altogether possible that fares would have fallen more without deregulation! Heck, the food might even have been edible!
This is only one industry, but the story's the same everywhere you look: the deregulation mania has been a disaster for America. Sure, stupid regulations can be a pain in the ass. But that's about stupidity, not regulation per se.
This is an excellent report, but we need to build on this and other detailed reporting on specific failures of de-regulation to develop a new narrative stressing the positive value of smart, far-sighted regulation in crafting systems that work for everyone. If freedom means anything, it's not just freedom from arbitrary restraints, it's freedom to do things of one's own choosing, and the capacity to do things depends in part on soundly-functioning systems, from cars that won't blow up to government that won't get you killed for reasons they lie to you about. That's why smart regulations expand our freedom, rather than restricting it.
A few juicy tidbits from the report on the flip--along with some broader thoughts on history, transportation and freedom.
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